Line a: AmendedCheck when correcting a Form 940 already filed for the same year. There is no Form 940-X; the amended return is a complete Form 940.Click to open the row in the table belowLine b: Successor employerCheck if you report wages a predecessor paid, or claim the special credit for state tax a non-FUTA predecessor paid.Click to open the row in the table belowLine c: No payments to employees in 2026Check if you made no payments to employees in 2026, then go to Part 7, sign and file.Click to open the row in the table belowLine d: Final: Business closed or stopped paying wagesCheck on the last return and attach a statement naming who keeps the payroll records and where.Click to open the row in the table belowLine 1a: One state onlyTwo-letter state abbreviation. Must be completed even if your state rate was zero; blank only when all wages were excluded from state unemployment tax.Click to open the row in the table belowLine 1b: More than one stateCheck and complete Schedule A. A worker who moved states mid-year makes you a multi-state employer.Click to open the row in the table belowLine 2: Credit reduction stateCheck if you paid wages subject to a credit reduction state's unemployment law, then complete Schedule A.Click to open the row in the table belowLine 3: Total payments to all employeesAll payments for employees' services, even those not taxable for FUTA. Anything you later exclude on line 4 must first be included here.Click to open the row in the table belowLine 4: Payments exempt from FUTA taxExempt fringe benefits, group-term life, qualified retirement contributions, dependent care (up to $7,500 for 2026) and other exempt payments.Click to open the row in the table belowLine 4a to 4e: Exempt payment type boxesCheck each type included on line 4. Moving expense and bicycle commuting reimbursements are no longer exempt and stay out of line 4.Click to open the row in the table belowLine 5: Payments over $7,000Total of each employee's payments above the $7,000 wage base, after removing exempt payments.Click to open the row in the table belowLine 6: SubtotalLine 4 plus line 5.Click to open the row in the table belowLine 7: Total taxable FUTA wagesLine 3 minus line 6.Click to open the row in the table belowLine 8: FUTA tax before adjustmentsLine 7 times 0.006, which assumes the full 5.4% state credit.Click to open the row in the table belowLine 9: All wages excluded from state taxLine 7 times 0.054 when every FUTA wage was excluded from state unemployment tax. Does not apply to wages taxed at a 0% state rate.Click to open the row in the table belowLine 10: Some wages excluded, or state tax paid lateResult of the line 10 worksheet. Late state payments earn only 90% of the credit they would have earned on time.Click to open the row in the table belowLine 11: Credit reductionTotal from Schedule A. Leave blank if line 9 applies.Click to open the row in the table belowLine 12: Total FUTA tax after adjustmentsLines 8 + 9 + 10 + 11. Line 17 must equal this amount.Click to open the row in the table belowLine 13: FUTA tax depositedDeposits for the year, including any overpayment applied from a prior year.Click to open the row in the table belowLine 14: Balance dueIf over $500 it should already have been deposited; paying a deposit-required amount with the return risks a penalty.Click to open the row in the table belowLine 15a: OverpaymentLine 13 minus line 12 when deposits exceed the tax.Click to open the row in the table belowLine 15b: Apply or refundCheck one box. Checking neither or both generally applies the overpayment to the next return.Click to open the row in the table belowLine 15c to 15e: Direct depositRouting number, account type and account number for a refund. A refund requested without them may be delayed.Click to open the row in the table belowHover over a line for what goes on it; click to open its row in the table below. On a touch screen, tap the line to jump to the row.
Line 16a to 16d: Quarterly FUTA liabilityComplete only if line 12 is over $500. Enter liability by quarter, not deposits; credit reduction liability belongs in 16d.Click to open the row in the table belowLine 17: Total liability for the yearSum of 16a to 16d. Must equal line 12.Click to open the row in the table belowPart 6: Third-party designeeNames a specific person (not a firm) and a 5-digit PIN; the authority expires one year after the due date.Click to open the row in the table belowPart 7: SignatureSigned by an owner, officer, partner or other authorized person. Failure to sign delays processing.Click to open the row in the table belowWho files Form 940
File Form 940 if you answer yes to either test in the instructions: you paid wages of $1,500 or more to employees in any calendar quarter in 2025 or 2026, or you had one or more employees for at least some part of a day in any 20 or more different weeks in 2025 or in 2026. Count full-time, part-time and temporary employees; a partnership does not count its partners. FUTA is an employer-only tax: “Only employers pay FUTA tax.” “Don’t collect or deduct FUTA tax from your employees’ wages.”
Different tests apply to household employers (cash wages of $1,000 or more in any quarter, and generally Schedule H instead of Form 940) and to agricultural employers ($20,000 in cash wages to farmworkers in a quarter, or 10 or more farmworkers in 20 different weeks). Section 501(c)(3) organizations generally are not subject to FUTA tax (except when paying wages for a non-501(c)(3) organization). State and local government employers, and federally recognized Indian tribal governments that participated in the state unemployment system for the full year, are exempt and file no Form 940.
A disregarded entity, including a single-member LLC, files under its own name and EIN, not its owner's. If a business is sold during the year, each employer that meets a test files its own Form 940; a successor employer checks box b and may count the predecessor's wages toward the $7,000 base. Section 3504 agents, certified professional employer organizations (CPEOs) and other aggregate filers identify themselves in the Aggregate Return Filers Only box, and agents and CPEOs attach Schedule R.
Line by line
| Line | What it is | Notes |
|---|---|---|
| a | Amended | Check when correcting a Form 940 already filed for the same year. There is no Form 940-X; the amended return is a complete Form 940. |
| b | Successor employer | Check if you report wages a predecessor paid, or claim the special credit for state tax a non-FUTA predecessor paid. |
| c | No payments to employees in 2026 | Check if you made no payments to employees in 2026, then go to Part 7, sign and file. |
| d | Final: Business closed or stopped paying wages | Check on the last return and attach a statement naming who keeps the payroll records and where. |
| 1a | One state only | Two-letter state abbreviation. Must be completed even if your state rate was zero; blank only when all wages were excluded from state unemployment tax. |
| 1b | More than one state | Check and complete Schedule A. A worker who moved states mid-year makes you a multi-state employer. |
| 2 | Credit reduction state | Check if you paid wages subject to a credit reduction state's unemployment law, then complete Schedule A. |
| 3 | Total payments to all employees | All payments for employees' services, even those not taxable for FUTA. Anything you later exclude on line 4 must first be included here. |
| 4 | Payments exempt from FUTA tax | Exempt fringe benefits, group-term life, qualified retirement contributions, dependent care (up to $7,500 for 2026) and other exempt payments. |
| 4a to 4e | Exempt payment type boxes | Check each type included on line 4. Moving expense and bicycle commuting reimbursements are no longer exempt and stay out of line 4. |
| 5 | Payments over $7,000 | Total of each employee's payments above the $7,000 wage base, after removing exempt payments. |
| 6 | Subtotal | Line 4 plus line 5. |
| 7 | Total taxable FUTA wages | Line 3 minus line 6. |
| 8 | FUTA tax before adjustments | Line 7 times 0.006, which assumes the full 5.4% state credit. |
| 9 | All wages excluded from state tax | Line 7 times 0.054 when every FUTA wage was excluded from state unemployment tax. Does not apply to wages taxed at a 0% state rate. |
| 10 | Some wages excluded, or state tax paid late | Result of the line 10 worksheet. Late state payments earn only 90% of the credit they would have earned on time. |
| 11 | Credit reduction | Total from Schedule A. Leave blank if line 9 applies. |
| 12 | Total FUTA tax after adjustments | Lines 8 + 9 + 10 + 11. Line 17 must equal this amount. |
| 13 | FUTA tax deposited | Deposits for the year, including any overpayment applied from a prior year. |
| 14 | Balance due | If over $500 it should already have been deposited; paying a deposit-required amount with the return risks a penalty. |
| 15a | Overpayment | Line 13 minus line 12 when deposits exceed the tax. |
| 15b | Apply or refund | Check one box. Checking neither or both generally applies the overpayment to the next return. |
| 15c to 15e | Direct deposit | Routing number, account type and account number for a refund. A refund requested without them may be delayed. |
| 16a to 16d | Quarterly FUTA liability | Complete only if line 12 is over $500. Enter liability by quarter, not deposits; credit reduction liability belongs in 16d. |
| 17 | Total liability for the year | Sum of 16a to 16d. Must equal line 12. |
| Part 6 | Third-party designee | Names a specific person (not a firm) and a 5-digit PIN; the authority expires one year after the due date. |
| Part 7 | Signature | Signed by an owner, officer, partner or other authorized person. Failure to sign delays processing. |
| Schedule A | Multi-State Employer and Credit Reduction Information | Mark every state where you had to pay state unemployment tax; for each credit reduction state, enter FUTA taxable wages, the rate and the credit reduction. |
Due dates
| What | Due | Notes |
|---|---|---|
| FUTA deposit, Q1 2026 (Jan to Mar) | April 30, 2026 | Only if cumulative undeposited FUTA tax is more than $500; otherwise carry it to the next quarter. |
| FUTA deposit, Q2 2026 (Apr to Jun) | July 31, 2026 | Same carryover rule. |
| FUTA deposit, Q3 2026 (Jul to Sep) | October 31, 2026 | October 31, 2026 is a Saturday, so a deposit is timely on the next business day, November 2. |
| FUTA deposit, Q4 2026 (Oct to Dec) | February 1, 2027 | If more than $500, deposit the entire amount, including any credit reduction liability. If $500 or less, deposit it or pay with the return. |
| State unemployment tax, for full credit | February 1, 2027 | State tax paid after the Form 940 due date earns a reduced credit (worksheet line 5). |
| Form 940 for 2026 | February 1, 2027 | February 10, 2027 if you deposited all FUTA tax when it was due. |
| Final 2026 credit reduction states announced by DOL | November 2026 | The 2026 Schedule A draft assumes California and the U.S. Virgin Islands pending the announcement. |
Deposits
“If your FUTA tax is more than $500 for the calendar year, you must deposit at least one quarterly payment.” Figure the liability each quarter (0.6% of the FUTA wages paid in the quarter, more where wages are excluded from state tax). If the quarter's liability, plus anything carried forward, is $500 or less, carry it to the next quarter; once it is more than $500, deposit by the last day of the month after the quarter ends. All deposits go by electronic funds transfer (EFTPS, IRS Direct Pay or your business tax account, or a same-day wire through your bank).
Credit reduction tax is figured on Schedule A when you file, but it is a fourth-quarter liability: “In years when there are credit reduction states, you must include liabilities owed for credit reduction with your fourth quarter deposit.” You may deposit it earlier in the year; it is not due until the fourth-quarter deposit date. FUTA deposits are separate from Form 941 deposits and never combine with them.
Penalties
Form 940 carries the employment tax return penalties described in Pub 15: failure to file at 5% of the unpaid tax per month or part month (generally up to 25%), failure to pay at 0.5% per month (also capped at 25%), and interest from the due date. Late or short FUTA deposits draw the IRC 6656 failure-to-deposit penalty of 2% (1 to 5 days late), 5% (6 to 15 days), 10% (16 or more days, or paid directly to the IRS or with the return when a deposit was required) and 15% (unpaid more than 10 days after the first IRS notice). FUTA is not withheld from employees, so the trust fund recovery penalty, which Pub 15 ties to withheld income, social security and Medicare taxes, does not reach it.
The 2026 instructions describe the new Automatic Exemption from Penalty (AEP) program, which replaces first-time abatement: an employer that timely filed Form 940 and timely paid for the prior 3 years is not assessed failure-to-file, failure-to-pay or failure-to-deposit penalties (except the penalty for not depositing by EFT). Otherwise, answer the penalty notice with a reasonable cause explanation; do not attach one to the return. Request abatement of an assessed penalty on Form 843, not on Form 940.
Corrections
There is no separate correction form. Use the 2026 Form 940 to amend a 2026 return (and the prior year's form for a prior year): check box a, Amended, enter every amount as it should have been on the original, sign it, and attach an explanation of why you are amending (for example, to claim credit for state unemployment tax paid after the due date). An amended Form 940 can be e-filed through MeF, with the explanation as an attachment; a paper amended return goes to the “Without a payment” address even if you include a payment. Aggregate filers attach Schedule R covering only the clients with adjustments.
Fixing a quarterly liability on line 16 is done the same way, on an amended Form 940. The deposit designation request is the tool for a failure-to-deposit notice where deposits were applied to the wrong period.
Where it goes wrong
- Line 16 shows deposits. “Report the amount of your FUTA tax liability for each quarter; do NOT enter the amount you deposited.” Lines 16a to 16d must total line 17, and line 17 must equal line 12.
- Credit reduction recorded in the wrong quarter. The extra tax for a credit reduction state is a fourth-quarter liability. Spreading it across quarters on line 16, or leaving it out of the fourth-quarter deposit, produces a deposit penalty.
- Lines 1a and 1b left blank. “You must complete line 1a or 1b even if you weren’t required to pay any state unemployment tax because your state unemployment tax rate(s) was zero.” Blank lines with wages on line 7 imply line 9 applies and the full 6.0% rate.
- State tax paid after the Form 940 due date. The credit for late state payments is limited to 90% of what it would have been, which shows up as a line 10 adjustment. Employers who pay the last state quarter in February are the usual case.
- Exempt payments not first included on line 3. Line 4 only removes payments already counted on line 3. For 2026, moving expense and bicycle commuting reimbursements are taxable for FUTA and the dependent care limit is $7,500.
- Name and EIN. Use the legal name and EIN the IRS assigned. A disregarded entity uses its own EIN; an e-filed return with an invalid EIN is not accepted.
Inside the IRS: what happens to Form 940
How the IRS processes it. Code and edit checks the state boxes. A single-state employer enters the state in box 1a; a multi-state employer checks box 1b, and those wages “must be reported on Schedule A and filed with Form 940.” “All employers who have paid employee wages in a Credit Reduction State for the tax year should check Box 2 and file a completed Form 940 Schedule A” (IRM 3.11.154). Do not send a blank 940 just to say your payroll service files it: the instruction for that case is to “Give the return to your manager or lead to be disposed of as classified waste.”
Amended returns. There is no separate correction form: you file a new Form 940 with the amended box checked. A return marked only copy or duplicate is not treated as amended unless it is “accompanied by a statement from the taxpayer that a previous return was filed.”
The FUTA certification match. After processing, the IRS checks the credit you claimed with the states. IRM 4.19.5 calls it “the method IRS uses to verify with the states that the payment claimed on the Form 940 and/or Schedule H were actually paid into the states' unemployment funds.” The credit is up to 5.4% against the 6.0% tax, and payments the state got late earn only “90 percent of the credit that would have been allowed had the payments been made on time.” Discrepancies produce:
- Letter 4010C, a proposed increase to FUTA tax, when the state's figures support less credit than you claimed.
- Letter 4011C, a proposed decrease.
- Letter 380C, explaining an adjustment, including when “the state could not verify the reported contributions.”
A “Zero Certification” means the state found no record, including when there is “a no match on the Employer Identification Number (EIN).” Make sure the EIN on your state unemployment account matches the EIN on the 940.
Deposits and penalties. “The Federal Unemployment Tax Act (FUTA) threshold to carry a quarterly tax liability to the next quarter is $500.” If the total tax is over $500 you must complete the Part 5 quarterly liability. If that schedule is incomplete, has a negative amount or does not equal the tax, the system sends CP 207 or CP 207L. Without a valid schedule the IRS averages the tax across the quarters, with any credit reduction placed in the fourth quarter, and computes the deposit penalty from that. Unlike the 941, “A taxpayer can request an extension of time to file Form 940 by submitting a formal letter to the IRS” (IRM 20.1.2).
Questions people ask about Form 940
Do we file Form 940 if every employee was in a 0% rate state?
Yes. Complete line 1a or 1b even when your state rate was zero. Line 9 (the full 6.0% rate) applies only when the wages were excluded from state unemployment tax, not when they were taxed at 0%.
When is the 2026 Form 940 due?
February 1, 2027, because January 31, 2027 is a Sunday. If every FUTA deposit was made on time and in full, you have until February 10, 2027.
Which states were credit reduction states for 2025?
The 2025 Schedule A lists California at 0.012 (1.2%) and the U.S. Virgin Islands at 0.045 (4.5%). For 2026, the draft Schedule A assumes the same two, but the Department of Labor announces the final list in November 2026 and the rates are not yet set.
How do we amend a Form 940?
File a complete 2026 Form 940 with box a checked, every line as it should have been, a signature and an explanation. It can be e-filed through MeF; on paper, use the Without a payment address.
We owe $300 of FUTA tax for the year. Do we deposit?
No deposit is required when the liability never exceeds $500. You can deposit it or pay it with the return by the due date.
Other employer, withholding and ACA forms
Payroll and employment tax returns: W-4 · 941 · 941-X · 944 · 943 · W-2 · W-3 · W-2c · 8027
Withholding returns: 945 · 1042
Health coverage (ACA) returns: 1095-C · 1094-C · 1095-B · 1094-B
Paper transmittal: 1096
All of them on one table · Information returns (1099 series)
Sources: Form 940 (2026 draft, posted May 5, 2026; 2025 final) and Instructions for Form 940 (2026 draft, posted Sept. 22, 2026); Schedule A (Form 940) for 2025 and 2026 draft (posted May 5, 2026); Pub 15 (2026) sections 11, 12 and 14; IRC 6656.